You’re thinking of doing an assisted living feasibility study – it means that you’re preparing to undertake a major project with significant consequences. On the one hand, congratulations and on the other hand, get ready for an E ticket (for those of you who are old enough and remember those from Disneyland!) ride.
In previous assisted living blog posts, I covered six of the commonly asked questions about an assisted living feasibility study (also called market study), and in this final installment in the series, I’ll cover the final two questions.
Assisted living feasibility study – what does it cost and how long does it take to complete?
I’d probably have to say that this is the #1 question we get. There are numerous factors that go into the pricing of an assisted living feasibility study – geographic size of the projected market area, the number of competitors in the area and the number of lines of service that you are considering, are among a few of these factors. In general, for larger projects, market or feasibility studies represent less than 1% of the overall cost of the project. That’s a pretty great value considering that a well-conceived and thoroughly done study can go a long way towards assisting you in obtaining financing as well as vetting your project.
A ”typical” assisted living feasibility study usually takes six to eight weeks to complete and they are divided into three phases. The first phase entails off site work and prepares our consulting staff for the onsite visit. The second phase is the onsite visit, which typically lasts three to five days. The third and final phase encompasses the assimilation of the observations and analysis from the onsite visit, the follow up on issues arising from the onsite visit and the formulation of the market/feasibility analysis report itself.
Assisted living feasibility study – I’ve got it, what do I do next?
Well first, I hope that you’ve thoroughly read your assisted living feasibility study. If it’s been well done, it contains a great deal of valuable and essential information. (You’d be shocked at how many people don’t carefully review their feasibility or market studies!) Ask yourself a few questions:
- Do you agree with the definition of the primary and secondary markets?
- How do the market demographics look? Is the market improving?
- What does the competition look like? Are there lots of competitors doing the same thing you want to do? How do you see your project standing out?
- After reading the report, do you feel confident that your project can be successful?
These are some good starter questions-there are plenty more to ponder. But note the last question I listed. If the answer to that question is an emphatic “yes” then you’re ready to take the next step. If not, it’s time to identify the reason(s) that you are non-committal or even pessimistic.
Let’s say that after reading your assisted living feasibility study, you’re enthusiastic about your project and ready to move forward. The next step is likely to be the formulation of a financial feasibility analysis, which is a fancy way of saying a pro forma income statement. In addition, it’s time to start thinking of assembling your design team and thinking about the design of your project. We tend to recommend that the financial feasibility analysis is your next logical step. It will tell you how your project can perform financially, given the observations/analysis from the assisted living feasibility study, the market assessment, and is a valuable instrument in your decision making process.
The commitment to spend capital to develop or add on to or convert a senior living project can be daunting, complex and sometimes down right scary. However, an assisted living feasibility study is a sound and prudent first step in taking away those concerns and allowing you to move forward with confidence. Most people understand the value of an insurance policy – an assisted living feasibility study can be the same thing . . . a policy that hedges your risk. Don’t leave home without it!